When a business organization decides on initiating a new project, it needs to choose an approach to managing project benefits statement and also define how exactly to benefit from successful completion of the project. An approach should provide the organization with a clear explanation on why to start the project and what benefits should be delivered to meet the business needs. Project benefits statement requires investigation of the business needs and definition of reasons for project initiation. Managing project benefits allows the organization to find out how to benefit from the changes being put in place.
Business Case and Project Benefits
Project benefits statement depends on the business needs. A business case addresses the business needs and the problem that should be solved by the project. A business case is a project initiation document that creates the formal justification for initiating a project. It gives reasons for starting the project that should produce some benefits to the sponsor and the product for the customer. The sponsor usually takes the responsibility for managing the business case and ensuring that this document covers the project objectives, costs and benefits. The sponsor needs to make sure that all the constraints of the project are aligned with the business strategy and that there is a plan for identifying, realizing, monitoring and evaluating benefits.
Business case development is closely linked to the project benefits statement process. When developing this document, the following tasks should be accomplished for stating the project benefits:
- Make necessary assessments and estimations of the benefits to be delivered by the project.
- Determine and document key steps of the benefits management process (identification, realization, monitoring and evaluation).
- Ensure necessary resources for producing the benefits are available.
- Set up the extent of project benefits statement.
- Define the benefits baseline in order to compare it to produced benefits at project completion.
Stages for Managing Project Benefits
Management of project benefits is a process that includes four high-level stages, such as Identification, Realization, Monitoring and Evaluation. Depending on project type and scope, each stage may include a great number of sub-stages, activities and deliverables. Below we give a brief description of the stages.
- Identification. The first stage in the project benefits management process aims at defining the full range of benefits, structuring these benefits, setting up dependencies and creating descriptions for each of the benefits. It results in creating benefit profiles that show high-level details on each business benefit of the project. The profiles can be combined into a collective portfolio of project benefits.
- Realization. The purpose of the second stage is to identify what activities are required to realize structured benefits and how this can be achieved. Benefits realization focuses on ensuring that the necessary resources are available throughout the project benefits statement lifecycle. It results in developing a benefits realization plan that specifies how to deliver the project’s core benefits stated in the portfolio.
- Monitoring. This stage implies activities for tracking the status of the benefits realization plan and measuring performance. Its purpose is to ensure that benefits are produced in line with the benefits realization plan. During the Monitoring stage the project manager needs to compare the progress of benefits production against the planned performance stated in the realization plan. In case of any deviations the project manager (under supervision and approval of the sponsor) should add necessary changes to the collective portfolio and/or individual benefit profiles.
- Evaluation. The final stage of the benefits management process includes activities for evaluating the collective impact and effectiveness of the project’s benefits as a whole. Project reviews and benefits analysis are used in evaluations. The stage results in the development of a review report that states status of the benefits realization process and specifies all the benefits that have been delivered.